Mar 17, 2013

Vietnam - Fast food market: bigger burgers to clamp smaller ones

VietNamNet Bridge – How will the fast food market will be after
McDonald’s makes its presence in Vietnam?

The presence of the big guy
McDonald would surely lead to the big changes in the fast food market, after it
forces the rivals to re-divide the market.

Some people now feel curious
about what will happen on the day the fast food giant McDonald’s makes debut in
Vietnam. Prior to that, they witnessed young people in HCM City queuing up to
wait for their turns to enjoy Starbucks coffee on the opening day February 1,
2013.

While some analysts think that
the presence of McDonald’s in Vietnam would overpower its rivals, others think
that it would not be an easy work for the fast food chain, even though it is a
big one, to penetrate the Vietnamese market.

In fact, McDonald’s also has to
overcome the barriers it meets in China when competing with the
fellow-countryman Yum!Brand which owns KFC brand, or Jollibee in the
Philippines.

A lot of foreign big fast food
brands have been present in the Vietnamese market. However, three of them are
believed to lead the market, namely KFC, Lotteria and Jollibee. All of them
have been here in Vietnam since 1990, while two of them have been coming
through the franchising way.

The three biggest giants in
Vietnam might have been listening to the news to find out who would be the
official partners of McDonald’s and where the first shop of McDonald’s would be
set up. They understand well that McDonald’s would be a redoubtable rival,
which would not only attract urban consumers, but tourists as well.

At present, Lotteria is believed
to have the largest chain with 146 shops, while KFC has 156 and Jollibee 30.
However, KFC is believed to have higher growth rates and turnover.

A report of Euromonitor showed
that KFC led the fastfood industry in Vietnam in 2011.

Doan Dinh Hoang, a branding
consultancy expert, said the joining of McDonald’s to the Vietnamese market
would make the fast food brands’ struggle stiffer.

The three big guys in the market
themselves have been competing fiercely with each other.

With 146 shops, Lotteria obtained
the turnover of VND39 billion just within 10 days, from the first day of the
Lunar New Year to the 11th day of the year. Meanwhile, it has reported the 30
percent increase in the turnover in 2012 over 2011.

The business performance of the
chain is better in HCM City than in Hanoi. Meanwhile, Hanoi is not an easy
market for Lotteria because of the culture factors, and partially because KFC
is holding the upper hand in the capital city.

Truong Ham Liem, Head of the
Marketing Division of Lotteria Vietnam, said the chain plans to open 50 more
shops in 2013, while 30 percent of which would be not in HCM City, but in other
localities such as the western part of the southern region and Da Lat City.

Not only striving to increase the
coverage, Lotteria Vietnam has put a high hope on the development of hamburger,
hoping that this would be a potential menu thanks to the reasonable price and
good taste.

Not only Lotteria, KFC and
Jollibee have also been pushing up the development of their chains in Vietnam.
Graham Allen, President of Yum Restaurant International once said about the
plan to develop 180 shops in Vietnam by 2014. Meanwhile, Jollibee Vietnam told
the press it wants to have 500 shops in Vietnam.

To implement the plan to expand
the networks, the big guys have been moving heaven and earth to look for retail
premises. However, they need to find out the answer to the question: “where
would the first McDonald’s shop be located?” first, before going ahead with
their plans.

DNSG

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